Director of Public Prosecutions (NSW) v Colakoglu; Director of Public Prosecutions

Judgment

1. MACFARLAN JA: I agree with Johnson J.
2. JOHNSON J: These four appeals, which were heard together, are brought by the Director of Public Prosecutions (NSW) ("the Director") under s.92(4) Confiscation of Proceeds of Crime Act 1989 ("the 1989 Confiscation Act") against the refusal of an application in each case under s.13(2)(b) of that Act for drug proceeds orders (in the quantum sought by the Director) at the Sydney District Court on 28 March 2014 in relation to the Respondents, Aydin Colakoglu, Joel Anthony Dodd, Mitchell Whitby and EC.
3. Several issues are raised by these appeals: 1. the nature and scope of an appeal by the Director under s.92(4) of the 1989 Confiscation Act; 2. the correct approach to determination of an application for a drug proceeds order under the 1989 Confiscation Act; 3. whether error is demonstrated on the part of the District Court Judge in the approach taken with respect to the applications in these cases; 4. if error is demonstrated, what order or orders should be made by this Court.
4. Before moving to consideration of these issues, the factual background to the appeals should be outlined.

Factual Background

1. Police investigations conducted by Strikeforce Pryce established that each of the Respondents was a participant in a drug supply enterprise. Respondent Colakoglu
2. The Respondent Colakoglu was arrested on 27 March 2012 in relation to his involvement in drug supply.
3. After pleading guilty in the Local Court, the Respondent Colakoglu came before his Honour Judge Lakatos SC for sentence on 1 November 2013. He pleaded guilty to one count alleging that, between 21 February 2012 and 27 March 2012, he supplied a large commercial quantity of MDMA (1,274.2 grams) contrary to s.25(2) Drug Misuse and Trafficking Act 1985 ("DMT Act"). This was a rolled up charge combining actual sales.
4. To be taken into account on a Form 1 was an offence that, on 25 January 2012, he supplied a commercial quantity of MDMA (298.7 grams). This offence involved possession for the purpose of supply.
5. During the course of the sentencing proceedings concerning the Respondent Colakoglu, reference was made to the fact that a confiscation application would be brought with respect to him at a later time.
6. On 14 November 2013, the Respondent Colakoglu was sentenced for the s.25(2) DMT Act offence, taking into account the Form 1 offence, to imprisonment comprising a non-parole period of four years and three months commencing on 27 March 2012 and expiring on 26 June 2016, with a balance of term of three years and three months commencing on 27 June 2016 and expiring on 26 September 2019. Respondent EC
7. The Respondent EC was arrested on 30 April 2012.
8. Following guilty pleas in the Local Court, sentencing proceedings concerning the Respondent EC took place before his Honour Judge Lakatos SC on 6 December 2013. The Court was told that a confiscation application was to be made with respect to him.
9. The Respondent EC pleaded guilty to five counts, with a further four offences to be taken into account on a Form 1. The five counts were as follows: 1. Count 1 - On 15 December 2011, supplying an indictable quantity of methylamphetamine (245.5 grams) (an actual sale). 2. Count 2 - On 22 March 2012, supplying a commercial quantity of methylamphetamine (286.4 grams) (an actual sale). 3. Count 3 - On 28 March 2012, supplying a commercial quantity of methylamphetamine (288.3 grams) (an actual sale). 4. Count 4 - On 24 April 2012, supplying a commercial quantity of methylamphetamine (635.75 grams) (an actual sale). 5. Count 5 - On 30 April 2012, supplying a commercial quantity of methylamphetamine (796.9 grams) (possession for the purpose of supply).
10. The offences taken into account by way of a Form 1 were as follows: 1. Offence 6 - On 20 December 2011, supplying an indictable quantity of methylamphetamine (275.9 grams) (an actual sale). 2. Offence 7 - On 7 March 2012, supplying an indictable quantity of MDMA (174.6 grams) (an actual sale). 3. Offence 8 - On 25 January 2012, supplying an indictable quantity of MDMA (57.2 grams) (an actual sale). 4. Offence 9 - On 25 January 2012, possessing cannabis leaf (96.6 grams).
11. On 6 February 2014, his Honour imposed the following sentences upon the Respondent EC (after taking into account the relevant Form 1 offences): 1. Count 1 - A fixed term of imprisonment for one year commencing on 30 April 2012 and expiring on 29 April 2013. 2. Count 2 - Imprisonment comprising a non-parole period of two years commencing on 20 July 2012 and expiring on 29 July 2014, with a balance of term of one year commencing on 30 July 2014 and expiring on 29 July 2015. 3. Count 3 - Imprisonment comprising a non-parole period of two years commencing on 30 July 2012 and expiring on 29 July 2014, with a balance of term of one year commencing on 30 July 2014 and expiring on 29 July 2015. 4. Count 4 - Imprisonment comprising a non-parole period of two years commencing on 30 October 2012 and expiring on 29 October 2014, with a balance of term of 15 months commencing on 30 October 2014 and expiring on 29 January 2016. 5. Count 5 - Imprisonment comprising a non-parole period of two years and three months commencing on 30 April 2013 and expiring on 29 July 2015, with a balance of term of 15 months commencing on 30 July 2015 and expiring on 29 July 2016. Respondent Dodd
12. The Respondent Dodd was arrested on 1 May 2012.
13. Following pleas of guilty in the Local Court, the Respondent Dodd came before his Honour Judge Lakatos SC for a sentencing hearing on 1 November 2013. In the course of those proceedings, it was mentioned that a confiscation application would be made with respect to this Respondent.
14. The Respondent Dodd pleaded guilty to the following offences: 1. Count 1 - Between 24 January 2012 and 21 February 2012, supplying a large commercial quantity of MDMA (944.3 grams) (a rolled-up charge arising from three actual sales). 2. Count 2 - Between 28 January 2012 and 6 February 2012, supplying an indictable quantity of methorphan (74 grams) (a rolled-up charge arising from two actual sales). 3. Count 3 - Between 18 February 2012 and 25 February 2012, supplying a commercial quantity of MDMA (223.02 grams) (a rolled-up charge arising from two actual sales). 4. Count 4 - Between 16 January 2012 and 26 February 2012, supplying an indictable quantity of MDMA (11.0608 grams) (a rolled-up charge arising from six actual sales).
15. On 31 January 2014, the Respondent Dodd was sentenced as follows: 1. Count 1 - Imprisonment comprising a non-parole period of four years and three months commencing on 1 February 2013 and expiring on 30 April 2017, with a balance of term of three years and three months commencing on 1 May 2017 and expiring on 31 July 2020. 2. Count 2 - A fixed term of imprisonment for two years commencing on 1 February 2013 and expiring on 31 January 2015. 3. Count 3 - Imprisonment comprising a non-parole period of two years and three months commencing on 1 August 2012 and expiring on 31 October 2014, with a balance of term of nine months commencing on 1 November 2014 and expiring on 31 July 2015. 4. Count 4 - Imprisonment comprising a non-parole period of two years and three months commencing on 1 May 2012 and expiring on 31 August 2014, with a balance of term of nine months commencing on 1 September 2014 and expiring on 31 May 2015. Respondent Whitby
16. The Respondent Whitby was arrested on 1 May 2012.
17. As with the other Respondents, following pleas of guilty in the Local Court, the Respondent Whitby came before his Honour Judge Lakatos SC and reference was made during the sentencing proceedings to a confiscation application to proceed at a later time.
18. The Respondent Whitby pleaded guilty to the following offences: 1. Count 1 - Between 20 January 2012 and 7 March 2012, supplying not less than a large commercial quantity of MDMA (1.182.56 kilograms) (a rolled-up charge arising from actual sales). 2. Count 2 - Between 15 December 2011 and 22 March 2012, supplying the commercial quantity of methylamphetamine (807.8 grams). 3. Count 3 - Between 28 January and 5 march 2012, supplying an indictable quantity of methorphan (72.1 grams) (a rolled-up charge arising from two actual sales and a free sample supplied).
19. In passing sentence on Count 1, the sentencing Judge took into account, on a Form 1, an offence of supplying ecstasy (0.59 grams in the form of two tablets).
20. On 29 August 2013, the Respondent Whitby was sentenced as follows: 1. Count 1 - Imprisonment comprising a non-parole period of four years and three months commencing on 1 November 2012 and expiring on 31 January 2017, with a balance of term of three years and three months commencing on 1 February 2017 and expiring on 30 April 2020. 2. Count 2 - Imprisonment comprising a non-parole period of three years commencing on 1 May 2012 and expiring on 30 April 2015, with a balance of term of one year commencing on 1 May 2015 and expiring on 30 April 2016. 3. Count 3 - A fixed term of imprisonment of two years commencing on 1 May 2012 and expiring on 30 April 2014.
21. The total effective sentence imposed on the Respondent Whitby was one of imprisonment for eight years including a non-parole period of four years and nine months. On 29 May 2015, this Court dismissed an appeal by the Respondent Whitby against sentence: Whitby v R [2015] NSWCCA 124.
22. Each of the Respondents was sentenced for "drug trafficking offences" for the purpose of ss. 4(1), 13(2) and 29(1) of the 1989 Confiscation Act.

The Confiscation Applications Concerning the Respondents

1. The hearing of the confiscation applications concerning the Respondents proceeded on 31 January 2014 and 28 February 2014.
2. With respect to the Respondent Colakoglu, the Director made application for a drug proceeds order under s.13(2)(b) of the 1989 Confiscation Act in the sum of $65,000.00 in respect of benefits said to have been derived by the Respondent from the commission of drug trafficking offences. On 28 February 2014, the Director revised this figure and pressed a claim in the sum of $39,000.00.
3. Concerning the Respondent Dodd, the Director made applications for: 1. forfeiture of cash under s.13(2)(a) in the sum of $2,715.00; and 2. a drug proceeds order under s.13(2)(b), in respect of benefits said to have been derived by the Respondent from the commission of drug trafficking offences, in the sum of $40,400.00.
4. With respect to the Respondent EC, the Director applied for: 1. forfeiture of cash under s.13(2)(a) in the sum of $405.00; 2. a drug proceeds order under s.13(2)(b), in respect of benefits said to have been derived by the Respondent from the commission of drug trafficking offences, in the sum of $90,900.00 - on 28 February 2014, the Director revised this claim and pressed for an order in the sum of $64,300.00.
5. With respect to the Respondent Whitby, the Director made application for a drug proceeds order under s.13(2)(b), in respect of benefits said to have been derived by him from the commission of drug trafficking offences, in the sum of $85,144.00.
6. At the hearing of the confiscation applications, the Director relied upon affidavits of Gina Mitchell sworn on 11 July 2013 (Colakoglu), 11 July 2013 (Whitby), 7 August 2013 (EC) and 31 October 2013 (Dodd). These affidavits included statements made for the purposes of ss. 31 and 31A of the 1989 Confiscation Act.

The Decision and Orders Made by the District Court

1. Put shortly, the Director had calculated the sum claimed by way of a drug proceeds order in each case by reference to the sum paid as a sale price by an undercover police officer to the particular persons supplying the drugs.
2. Again put shortly, the submission advanced for the Respondents in the District Court was that the sum to be provided for, in each drug proceeds order, should be calculated by reference to the monetary sum actually derived by the particular person. In effect, his Honour accepted the construction of the provisions advanced for the Respondents.
3. His Honour's judgment referred to the Notices of Motion giving rise to the claims, and then turned to various provisions contained in the 1989 Confiscation Act. After referring to ss.4, 17, 18 and 29, his Honour observed (page 4, Judgment, 28 March 2014): "Just pausing there it is clear by reference to the objects of the Act that the Act seeks to denude those who have committed any drug trafficking offences of the benefits they have derived from such activity."
4. His Honour then turned to consider the terms of s.30 of the 1989 Confiscation Act and the decision of this Court in R v Hall [2013] NSWCCA 47; 227 A Crim R 544. His Honour summarised the approach to calculation adopted by the Director in the following way (page 7): "In short compass what is clear is that the value of the benefits derived in Ms Mitchell's affidavit, and that is the position which the Crown argued for, involved an assessment of the sale price usually to the undercover officer involved in the operation in its entirety."
5. With respect to the claims mentioned at 29 and 30 above, his Honour made forfeiture orders in the sums claimed concerning the Respondent Dodd ($2,715.00) and EC ($405.00). Those orders are not the subject of controversy before this Court.
6. His Honour outlined the relevant facts in the following way (pages 7-8): "The facts in relation to Mr Colakoglu included the following statements: 'The offender would make $1 to $2 profit per pill.' Thereafter without going through it specifically the total profit assessed to have been made as known by Mr Colakoglu was said to have been $8,000. That was in the facts contained in the sentencing documents. One can see that the total profit of $8,000 (known) is significantly different from the maximum total of $65,000. Similarly Mr Whitby's supporting affidavit, that of Ms Mitchell, in support of the $85,144 in his case the facts read that the total amount known of the profit that he made in the various drug transactions he was involved in was $3,000 although the purchase price and the price paid to the undercover officer was something to the extent of $50,000. Similarly Mr Dodd, again I will not go specifically through these, but Mr Dodd's position is relatively similar as is the position of [EC]."
7. In the course of explaining his reasons for rejecting the Director's approach to the application for drug proceeds orders, his Honour said (page 9-11): "Moving then to the more problematical area of the derivation of benefits in relation to each. As I have said the principal objects of the Act are to deprive persons of benefits derived from the commission of drug offences. I have indicated by reference to the Act and the statements of McClellan J [in R v Hall] the three step procedure the Court needs to be involved in. The second matter, the assessment of benefits, is to be undertaken by having regard to the information before the Court concerning the matters set out in s 30(1). As I have said relevantly s 30(6) provides in assessing the value of the proceeds of drug trafficking any expenses or outgoings of the defendant in connection with the commission of the offence must not be deducted. The Crown has based its argument that the entire purchase price or sale price of each of the drugs constituted the benefits derived by each of the offenders on a proposition that this provision, s 30(6), mandated that there should be no deduction of expenses or outgoings from the purchase price and the cost price to the offender was properly to be construed as an expense or outgoing. If this construction were true an amount of a drug, for example of a value of $10,000, which passed through the hands of a number of connected co-offenders the effect would be that the Crown would be enabled to seek forfeiture orders of many multiples of the actual value of one lot of drugs. It is difficult to accept that the legislature intended that the community profit many times over from the commission of an offence as opposed to taking away any, if I might put it this way, legitimate proceeds of crime from an offender. Indeed, it should fairly be noted that so far as at least Mr Colakoglu, Mr Whitby and Mr Dodd are concerned, and it may also apply to [EC], the value of the same amount of drugs has been claimed from each of them. A close analysis of the statements supporting the forfeiture orders indicate that the same amount of drugs had been made the subject of the claim for cost price for all of those offenders. In my opinion that cannot be, as a matter of common sense at least, the proper construction of this Act. In any event, as I have earlier observed s 30 deals with the manner in which the benefit is to be assessed and does not in terms reflect upon the question of whether any benefit was derived. In my opinion if the evidence is reliable and clear that a person has paid for example X dollars for drugs and sold those drugs for X plus one dollars, on any reasonable construction the benefit derived by that person is one dollar not X dollars or X plus one dollars. That of course is based upon a full knowledge of the facts but in my view that construction must be correct. I accept that the Court of Criminal Appeal authorities have indicated that courts are often called upon to make decisions about these matters on less than complete information and accordingly reasonable estimates need to be made. Where the evidence is not reliable of an amount of profit made by a person it may be legitimate to treat the purchase price as the benefit derived, or for that matter the sale price. However, in the present case the Crown has approached the task in respect of these offenders, in my view, inconsistently in the sense that in some cases it has been prepared to accept that the profit alone constitutes the benefit whereas in other instances it is fixed upon the purchase price of the drug in question. It is not immediately clear why the judgment was made in the former case, that is to say where the evidence was reliable and hence justified a lesser figure. In other words, not much argument was directed towards why profit was chosen in relation to one instance and purchase price or sale price in another. Generally, in my view, if there is reliable evidence supporting a proposition that the profit made by an offender was the amount he or she made from the sale of the drug and the amount was but a percentage of the purchase price the benefit that the offender derived was the profit and not the purchase price."
8. A little later, his Honour summarised the approach adopted to the applications in the following way (pages 11-12): "Having gone through both the facts and the evidence in support of the confiscation orders it appears to me as a general proposition that the Crown has been prepared to accept on a number of occasions that where pills were on-sold usually to the undercover officer but I have extrapolated this to instances where such a person was not the ultimate consumer, that the range of profit was indeed between $1 or $2 per pill. In my view, if that is to be accepted for the purposes of sentencing I see no reason why I should not rely upon that as a basis upon which to deal with confiscation matters. Let me say what I have done in terms of how I have applied all these considerations. In my view the proper procedure is to discern the profit where it is accepted by both sides to be profit. Secondly, I think it is also legitimate and in accordance with the Act to deduct from the assessment any amount of drugs that the relevant offender had in his possession at the time he or she was arrested. In my view the best that can be discerned from that is that they have either paid for that from somebody else or owe somebody else for that amount of drug but they have not yet come into moneys and/or benefits because it has not been sold. Secondly, there were a number of instances in the present case where samples appear to have been given away by various of the offenders to usually the undercover officer. In my view, on no view could that be a benefit derived or at least I do not know how to assess the goodwill which one might argue that was designed to achieve. I put that out of my consideration. Finally, I take out of consideration any moneys recovered from the various offender's homes, which in my view must be deducted from any benefit derived. Those are then the formulas that I have applied to reach these results."
9. Applying this approach to the applications, his Honour made drug proceeds orders in the following amounts: 1. Respondent Colakoglu - $5,890.00. 2. Respondent Dodd - $8,712.00. 3. Respondent EC - $12,740.00. 4. Respondent Whitby - $13,636.00.

The Appeal Provision

1. Section 92 of the 1989 Confiscation Act provides for appeals, including appeals by the Director under s.92(4). The section states: "92 Appeals (1) Without affecting any other right of appeal, a forfeiture order in relation to any property is appellable by any person who has an interest in the property: (a) in the case of a person convicted of an offence in reliance on which the forfeiture order was made - as if the order were, or were part of, a sentence imposed in respect of the offence, or (b) in any other case - as if the person had been convicted of a serious offence and the order were, or were part of, a sentence imposed in respect of the offence. (2) Without affecting any other right of appeal, a pecuniary penalty order or drug proceeds order is appellable as if it were, or were part of, a sentence imposed in respect of the offence in relation to which the order was made. (3) On appeal, a forfeiture order, pecuniary penalty order or drug proceeds order may be confirmed, discharged or varied. (4) The Attorney General or the Director of Public Prosecutions may appeal to the Court of Criminal Appeal against a refusal by a court to make a drug proceeds order, forfeiture order, pecuniary penalty order or restraining order, and the Court of Criminal Appeal may in its discretion make such order as could have been made in the first instance. (5) A drug proceeds order, forfeiture order, pecuniary penalty order or restraining order made by the Court of Criminal Appeal under subsection (4) shall be taken to have been made by the Supreme Court under this Act, but is not on that account subject to further appeal." The Proceeds of Crime Provisions
2. The principal objects of the 1989 Confiscation Act appear in s. 3: "3 Principal objects The principal objects of this Act are: (a) to deprive persons of the proceeds of, and benefits derived from, the commission of offences against certain laws of the State, and (b) to provide for the forfeiture of property used in or in connection with the commission of such offences, and (c) to enable law enforcement authorities effectively to trace such proceeds, benefits and property, and (d) to provide for the enforcement in the State of forfeiture orders, pecuniary penalty orders and restraining orders made in respect of offences against the laws of other States."
3. Several terms relevant to this appeal are defined in s. 4: "4 Definitions (1) In this Act: … benefit includes service and advantage. … drug proceeds order means an order made under section 29. … proceeds, in relation to a serious offence, means any property that is derived or realised, directly or indirectly, by any person from the commission of the offence. … (3) A reference in this Act to a benefit derived by a person includes a reference to: (a) a benefit derived, directly or indirectly, by the person, and (b) a benefit derived, directly or indirectly, by another person at the request or direction of the first person."
4. Section 13 is in the following terms: "13 Applications for confiscation orders (1) If a person is convicted of a serious offence other than a drug trafficking offence, an appropriate officer may apply to an appropriate court for one or both of the following orders: (a) a forfeiture order against property that is tainted property in respect of the offence, (b) a pecuniary penalty order against the person in respect of benefits derived by the person from the commission of the offence. (2) If a person is convicted of a drug trafficking offence, an appropriate officer may apply to an appropriate court for one or both of the following orders: (a) a forfeiture order against property that is tainted property in respect of any drug trafficking offences, (b) a drug proceeds order against the person in respect of benefits derived by the person from the commission of any drug trafficking offences. (3) An application must be made before the end of the relevant period in relation to the conviction, except with the leave of the Supreme Court. (3A) The Supreme Court must not grant leave under subsection (3) unless: (a) the property or benefit to which the application relates is: (i) property of the kind referred to in paragraph (d) of the definition of tainted property in section 4 (1), or (ii) a benefit of the kind referred to in section 25 (2) (a1) or 30 (1)(b), and (b) the Court is satisfied that: (i) the property or benefit was derived, realised or identified only after the end of the relevant period, or (ii) necessary evidence became available only after the end of that period, or (iii) it is otherwise in the interests of justice to do so. (4) An application may be made under subsection (1) (b) in relation to one or more serious offences. (5) If an application under subsection (1) or subsection (2) has been finally determined, no further application may be made under that subsection in relation to the same conviction, except with the leave of the Supreme Court or in such circumstances as are prescribed. (6) The Supreme Court shall not grant leave unless satisfied that: (a) the tainted property, or the benefit, to which the new application relates was identified only after the first application was determined, or (b) necessary evidence became available only after the first application was determined, or (c) the Court is otherwise satisfied that it is in the interests of justice to grant the leave."
5. Division 4 (ss.28-31A) provides for the making of drug proceeds orders. Those sections are in the following terms: "28 Application of Division This Division applies to proceeds of a drug trafficking offence that come into the possession of a person either before or after the commencement of this Division. 29 Drug proceeds orders (1) If an application is made for a drug proceeds order against a person (in this Division called the defendant) convicted of a drug trafficking offence, the court must: (a) determine whether the defendant has derived any benefit in connection with drug trafficking at any time, and (b) if the court believes the defendant has so benefited, assess the value of any such benefit, and (c) order the defendant to pay to the State a pecuniary penalty equal to the amount so assessed. (2) If: (a) property that is the proceeds of drug trafficking has been forfeited under this Act or a law of the Commonwealth, a Territory or another State, or (b) a forfeiture order is proposed to be made against property that is proceeds of drug trafficking, the pecuniary penalty to be made is taken to be reduced by an amount equal to the value of the property as at the time of the making of the forfeiture order. (3) If: (a) a court makes an order under this section in relation to an offence, and (b) in calculating the penalty amount, the court took into account a proposed forfeiture order in respect of property, and (c) an appeal against the forfeiture order is allowed or the proceedings for the proposed forfeiture order terminate without the proposed forfeiture order being made, an appropriate officer may apply to the court for a variation of the order to increase the penalty amount by the value of the property and the court may, if it considers it appropriate to do so, vary the order accordingly. (4) An amount payable by a defendant to the State in accordance with an order made under this section is, for all purposes, taken to be a civil debt due by the defendant to the State. (5) An order made by a court under this section may be enforced as if it were an order made by the court in civil proceedings instituted by the State against the defendant to recover a debt due by the person to the State. 30 Assessment of proceeds of drug trafficking (1) A court is to assess the benefits (if any) derived in connection with drug trafficking by having regard to information before the court concerning all or any of the following matters: (a) the money, or the value of property other than money, that came into the possession or control of the defendant, or another person at the request or by the direction of the defendant, at any time in connection with drug trafficking by the defendant, (b) the value of any benefit that was provided for the defendant, or for another person at the request or direction of the defendant, in respect of the defendant's involvement or participation in a public promotion relating to drug trafficking (or such part of the value of the benefit as is commensurate with the proportion of the defendant's involvement or participation that is concerned with drug trafficking), (c) the value of any benefit, other than a benefit of a kind referred to in paragraph (a) or (b), that was provided for the defendant, or another person at the request or by the direction of the defendant, because of drug trafficking by the defendant, (d) the market value, at the time of the drug trafficking, of substances similar or substantially similar to the prohibited drug or prohibited plant involved in the drug trafficking offence or offences, (e) the amount that was, or the range of amounts that were, ordinarily paid for the doing of an act or thing similar or substantially similar to the doing of the act or thing constituting the drug trafficking, (f) the value of the defendant's property appearing to the court: (i) to have been held by the defendant at any time since his or her conviction, or (ii) to have been transferred to the defendant at any time since the beginning of the period of 6 years that ended when the proceedings were instituted against the defendant, (g) the value of the defendant's income and expenditure: (i) at any time since his or her conviction, or (ii) at any time since the beginning of the period of 6 years that ended when the proceedings were instituted against the defendant. (2) In considering whether to treat a benefit of the kind referred to in subsection (1) (b) as a benefit derived in connection with drug trafficking, a court may have regard to any matter that it thinks fit, including the public interest and any research, educational or rehabilitative purpose of the public promotion concerned. (3) If evidence is given that the value of the defendant's property or the defendant's income or expenditure: (a) after the defendant committed drug trafficking offences, or (b) during and after the end of the period of 6 years that ended when proceedings for the drug trafficking offences were last instituted against the defendant, exceeded the value of the defendant's property or income or expenditure before the defendant committed the drug trafficking offences or before the commencement of that period then the court must treat the value of the benefits derived by the defendant because of drug trafficking by the defendant as being not less than the amount of the excess. (4) Subsection (3) does not apply to the whole or a part of the excess referred to in that subsection if the defendant satisfies the court that it was due to causes unrelated to drug trafficking or the commission of other serious offences. (5) For the purposes of assessing the value of the proceeds of drug trafficking in a case where a drug proceeds order has previously been made against the defendant, the court must leave out of account any of the defendant's proceeds of drug trafficking that are shown to the court: (a) to have been taken into account in determining the amount to be recovered in respect of drug trafficking under a previous drug proceeds order or pecuniary penalty order, or (b) to have been recovered under an order made under the Criminal Assets Recovery Act 1990. (6) In assessing the value of the proceeds of drug trafficking of a defendant convicted of a drug trafficking offence or offences, any expenses or outgoings of the defendant in connection with the commission of the offence or offences must not be deducted. (7) This section applies to and in relation to property that comes into the possession or under the control of a person either within or outside New South Wales, and to benefits that are provided for a person either within or outside New South Wales. 31 Statements relating to drug trafficking (1) If: (a) there is tendered to a court by the prosecution a statement as to any matters relevant to determining whether the defendant has benefited from drug trafficking or to the assessment of the value of the defendant's proceeds of drug trafficking, and (b) the defendant accepts to any extent any allegation in the statement, the court may, for the purposes of that determination and assessment, treat the defendant's acceptance as conclusive of the matters to which it relates. (2) If: (a) a statement is tendered under subsection (1) (a), and (b) the court is satisfied that a copy of that statement has been served on the defendant, the court may require the defendant to indicate to what extent the defendant accepts each allegation in the statement and, so far as the defendant does not accept any such allegation, to indicate any matters the defendant proposes to rely on. (3) If the defendant fails in any respect to comply with a requirement under subsection (2), the defendant may be treated for the purposes of this section as accepting every allegation in the statement apart from: (a) any allegation in respect of which the defendant has complied with the requirement, and (b) any allegation that the defendant has benefited from drug trafficking or that any benefit was derived by the defendant in connection with drug trafficking carried on by the defendant or another. (4) (Repealed) (5) An allegation may be accepted or a matter indicated for the purposes of this section either: (a) orally before the court, or (b) in writing in accordance with the rules of court. (6) No acceptance by the defendant under this section that any benefit was derived by the defendant in connection with drug trafficking carried on by the defendant or another shall be admissible in evidence in any proceedings for an offence. (7)-(9) (Repealed) 31A Evidence as to value of drugs and other matters (1) In proceedings for an application for a drug proceeds order, a member of the NSW Police Force, a member of the Australian Federal Police or a Customs officer may give evidence (whether in person or in a statement tendered to the court by the prosecution under this Division): (a) as to the market value, at the time of a drug trafficking offence in relation to a substance, or substantially similar substances, and (b) as to the amount, or the range of amounts, ordinarily paid for the doing of a similar or substantially similar act or thing to the offence. (2) The evidence may be given by a person who is experienced in the investigation of indictable offences under (or similar to offences under) the Drug Misuse and Trafficking Act 1985. (3) Any such person may give evidence, to the best of his or her information, knowledge and belief: (a) as to the amount that was the market value of a prohibited drug or prohibited plant within the meaning of the Drug Misuse and Trafficking Act 1985 at a particular time or during a particular period, or (b) as to the amount, or the range of amounts, ordinarily paid at a particular time, or during a particular period, for the doing of an act or thing in relation to any such prohibited drug or prohibited plant, despite any rule of law or practice relating to hearsay evidence and the testimony is, in the absence of evidence to the contrary, evidence of the matter testified to."

Competency of the Appeal

1. Mr Dhanji SC, who appeared with Ms Burgess for the Respondents Dodd, Whitby and EC, advanced a submission challenging the competency of the Director's appeal. Mr Brady, for the Respondent Colakoglu, joined in this submission.
2. It was submitted for the Respondents that an appeal by the Director under s.92(4) of the 1989 Confiscation Act is confined to an appeal against a refusal to make a drug proceeds order. In this case, it was submitted, the District Court did not refuse to make an order. Rather, in each case, a drug proceeds order was made against the relevant Respondent, although not in the sum as sought by the Director.
3. It was submitted for the Respondents that the right of appeal conferred by s.92(4) does not extend to an appeal against the quantum of a drug proceeds order as made. It was submitted that s.92(4) may be contrasted with the terms of s.92(1) and (2), which provide for a drug proceeds order to be appellable as is if it was part of a sentence.
4. The Director submits that s.92(4) should be construed as if it said "appeal … against a refusal by a court to make a drug proceeds order in the amount sought" by the Director.
5. In this respect, the Director relied upon the decision of this Court in R v Galek (1993) 70 A Crim R 252, in support of the proposition that s.92(4) permitted the Director to appeal against the making of an order in a lesser sum than that which was sought at first instance.
6. In response to the Director's submission based upon R v Galek, Mr Dhanji SC submitted orally that the Court should not follow that decision upon the basis that it is plainly wrong. It was submitted that this issue was dealt with briefly in R v Galek and submissions were developed before this Court in support of a contrary view.
7. It was submitted for the Respondents that the Court should not fill the gap in s.92(4) by reading in the words "in the amount sought" at first instance. It was said that there was no warrant to read in words of this type: Taylor v The Owners - Strata Plan No. 11564 [2014] HCA 9; 253 CLR 531 at 548 [38]. This was particularly so, it was submitted, as the relevant legislation provides for the confiscation of property rights and should be strictly construed: Studman v Director of Public Prosecutions (Cth) [2007] NSWCCA 285; 177 A Crim R 34 at 40 [35]; Commissioner of Australian Federal Police v Fysh [2013] NSWSC 81; 272 FLR 414 at 416-417 [10]-[12]. Decision
8. As recognised by counsel for the Respondents, the decision of this Court in R v Galek supports the Director's right to appeal under s.92(4) against a refusal by a court to make an order as sought at first instance by the Crown. So much was made clear in R v Galek by Allen J (at 255) and by Hunt CJ at CL (Mathews J agreeing) at 258.
9. The precise nature of the statutory avenue of appeal to this Court depends upon the legislation in question: Fleming v The Queen [1998] HCA 68; 197 CLR 250 at 258-260 [17]-[21]; Turnbull v New South Wales Medical Board [1976] 2 NSWLR 281 at 297-298.
10. It is noteworthy that the legislature has used what appears to be a restricted formula of words in s.92(4), namely an appeal against a refusal to make an order. That provision may be contrasted with the terms of s.92(1) and (2). It may be contrasted, as well, with other provisions providing for a Crown appeal against sentence: ss.5D, 5DA, 5DB and 5DC Criminal Appeal Act 1912.
11. It might be said that if the legislature had intended to provide for an appeal by the Director against an order (including quantum) as well as the refusal to make an order, it could have been expressed simply in these terms. This would be especially so given the operation of the provision in the area of confiscation of property.
12. This Court should only depart from the decision in R v Galek if satisfied that the decision is clearly wrong: Green v The Queen [2011] HCA 49; 244 CLR 462 at 490-491 [84]-[85]. For the Court to depart from a previous decision would require a strong conviction that the previous decision was incorrect: R v Arnold [1993] 30 NSWLR 73 at 85; Jimmy v The Queen [2010] NSWCCA 60; 77 NSWLR 540 at 570 [127].
13. Whilst recognising the arguments advanced for the Respondents in this respect, I am not persuaded that it has been demonstrated that the decision in R v Galek is clearly wrong.
14. Accordingly, that decision should be followed and the challenge to the competency of the appeal should be rejected.

The Merits of the Appeal The Director's Submissions

1. The Director submitted that the 1989 Confiscation Act, in the context of drug proceeds orders, is dealing with benefits and not profits. It was submitted that the clear intention of the legislation was that, when a person exchanges drugs for money, the amount of money received by the person is the benefit and the Court cannot reduce that amount by deducting any expenses or outgoings (having regard to s.30). Accordingly, the Director submits, the term "benefit" is the monetary amount received and not profits after the deduction of expenses.
2. The Director submits that the distinction between "benefit" and "profit" is not new. Reference was made to the decision of the Victorian Court of Appeal in R v Nieves (1991) 51 A Crim R 350 at 355-356 and the decision of the Supreme Court of Queensland (Shepherdson J) in Director of Public Prosecutions (Qld) v Raines (1995) 79 A Crim R 448 at 450-451.
3. The Director referred to the decision of this Court in R v Fagher (1989) 16 NSWLR 67, in particular the judgment of Hunt J at 77.
4. It was submitted that the primary Judge in this case adopted an approach which is contrary to s.30(6) of the 1989 Confiscation Act. It was submitted that his Honour erred in approaching the matter upon the basis of attempting to ascertain if reliable evidence existed as to the expenses and outgoings, for the purpose of reducing the amount constituting the benefit. It was submitted that such an approach is contrary to s.30(6) which makes clear that such outgoings and expenses are not to be deducted.
5. The Director submitted that his Honour erred in law by deducting expenses and outgoings from the proceeds of drug sales in assessing the benefit. It was submitted, in respect of each matter, that once his Honour accepted the statements made under s.31 of the 1989 Confiscation Act as to the amount of money received by each Respondent as the proceeds of drug sales, it was incumbent on his Honour to assess the entire amount of the proceeds as the value of the benefit, and to make a drug proceeds order for that amount. The Respondents' Submissions
6. It was submitted for the Respondents that the approach advanced by the Director would seek to extract from an offender a drug proceeds order which may exceed, by a considerable margin, the amount of any profit which the offender received from his or her crime. It was submitted that such an approach would breach the double jeopardy principle contained in s.20 Crimes (Sentencing Procedure) Act 1999.
7. The Respondents submitted that assistance could be obtained from the long title of the 1989 Confiscation Act which referred to the confiscation of the "profits of crime".
8. The Respondents emphasised that the task to which s.30(6) is directed is "assessing the value of the proceeds of drug trafficking". The concepts of "benefit" and "proceeds" are distinct, and are separately defined in s.4 of the 1989 Confiscation Act (see [44] above).
9. The Respondents submitted that the inclusive definition of "benefit" does not attempt to alter the natural meaning of the word. It was noted that in Commissioner of the Australian Federal Police v Fysh, McCallum J observed (at 418[21]) that the ordinary meaning of the word "benefits" is "the good or gain received".
10. Accordingly, the Respondents submitted that it is apparent from this that the exercise required by s.29(1)(b), and the task to which s.30(6) is directed, are different.
11. The Respondents accepted, however, that the assessment of the value of the "benefit" in s.29(1)(b) may be related to the assessment to the value of the "proceeds" in s.30(6). That is, an assessment of the former may require an assessment of the latter.
12. The Respondents submitted that the focus of s.30(6) is on the particular "offence or offences" so that the "expenses and outgoings" are consequentially limited to, in the context of drug trafficking offences, matters related to the particular transaction. This will include, it was said, matters such as payments made to persons to deliver drugs and payments for transport associated with the delivery of the drugs. It did not include costs anterior to the particular offence.
13. It was submitted that this construction presented no particular evidentiary difficulty with evidence being given regularly of the market place value of prohibited drugs, including the cost at both the wholesale and street value levels. It was submitted that such evidence is contemplated by s.30(1)(d).
14. The Respondents submitted that this construction is consistent with other provisions of the 1989 Confiscation Act, including s.30(1)(f) and (g), s.30(3) and (4), in which the focus is on net gains.
15. It was submitted that s.30(3), in its terms, requires an exercise to be undertaken by which the net gain is assessed as the "benefit" for the purposes of s.29(1). The "benefit" in s.29(1)(b) cannot take on different meanings dependent on which part of s.30 is utilised.
16. Indeed, it was submitted for the Respondents that the Court may have approached the matter through s.30(3) in this case. Had this been done, the Court would have assessed the amount by which the particular Respondents' property, after he committed the drug trafficking offences, exceeded the value of his property before he committed the offences. The Court would then have been entitled to "treat the value of the benefits derived by [the Respondent] as being not less than the amount of the excess". The Respondents submit that this is, in effect, what was done here.
17. The Respondents submit that the word "benefit" in s.29(1) means the net gain when calculated by the means permitted by s.30(3) and (4). The meaning of the term does not change as a result of being calculated by other means contemplated by s.30.
18. The Respondents submit that the Director's reliance on authorities dealing with other legislation provides limited assistance in this case. None of those authorities deal with the present question in the context of the 1989 Confiscation Act. It was submitted that none of those authorities involved a statutory scheme where a distinction is made between "proceeds" and "benefits" as in the 1989 Confiscation Act.
19. That said, the Respondents submit that there is some support for their construction in these authorities. Reference was made to the decision of the Court of Appeal of New Zealand in R v Pedersen [1995] 2 NZLR 386 at 390, where the Court doubted that payment to a supplier is an expense or outgoing in connection with the commission of an offence of sale.
20. The Respondents advanced an alternative construction, whereby accounting to another participant in the enterprise is not an expense or outgoing within s.30(6) of the 1989 Confiscation Act.
21. It was submitted that an analysis of the facts in the present case demonstrates that the Respondents Whitby, Dodd and EC did not purchase drugs and then on-sell them for a profit. Rather, they received money for the drugs from the undercover officer and then accounted to each other for the supply of those drugs, retaining their share of the purchase price from the undercover officer and passing on the balance of that up the line. It was submitted that this accounting to another was not an "expense" or "outgoing" within the meaning of s.30(6).
22. The Respondents relied upon the judgment of Pincus J in Cornwell v Commissioner of the Australian Federal Police (1990) 24 FCR 544 at 562 and the judgment of Macrossan CJ in Re Ashworth (1992) 2 Qd R 459 at 467, with respect to the concept of "expenses or outgoings".
23. Reliance was placed upon the judgment of Wilcox J (Lockhart J agreeing) in Cornwell v Commissioner of the Australian Federal Police at 544-555 where his Honour observed that the "payment of monies to a partner, calculated by reference to the success of an enterprise, is a payment not ordinarily encompassed by the words 'expenses or outgoings'".
24. It was submitted that, in the present cases, the objective of the Respondents was to supply the undercover officer with the drugs requested for an agreed price, with such drugs to be sourced up the line and supplied down the line for that purpose. Agreements in relation to the supply of those drugs between the Respondents were contingent on the payment by the undercover officer, and were not accounted for until after payment was made. Each Respondent shared the financial risk in that each was reliant on the money being paid by the undercover officer. Each retained a share of the purchase price, and handed on the balance to their supplier to take their share of the proceeds.
25. In these circumstances, the Respondents submitted that the money handed up the line by each Respondent was not an "expense" or "outgoing" of the particular Respondent "in connection with the commission of the offence". Accordingly, it was submitted, s.30(6) did not prevent that money being "deducted".
26. The Respondents submitted, contrary to the Director's contention, that the primary Judge did not envisage two approaches to the assessment of benefit under the legislation. Rather, his Honour said no more than if the only evidence was the gross benefit, then the Court would have accepted that was the benefit. It was submitted that it was open to his Honour to observe that, when there was reliable evidence as to the net benefit, the Court was entitled to act on it. Resolution of Competing Submissions
27. It is for the Director to establish error on the part of the primary Judge. I am not persuaded that error has been demonstrated. In so concluding, I accept generally the submissions made for the Respondents.
28. The relevant provisions of the 1989 Confiscation Act were considered most recently by this Court in R v Hall on a successful appeal by the Director against the (complete) refusal by a primary Judge to make a drug proceeds order. McClellan CJ at CL (Bellew and Button JJ agreeing) said at 553 [36]-[37]: "36 … Section 29(1)(a) requires the court to determine whether a defendant has derived any benefit in connection with drug trafficking at any time. If the court believes that a defendant has so benefited it must assess the value of that benefit (s 29(1)(b)) and order the defendant to pay a pecuniary penalty equal to the amount so assessed: s 29(1)(c). The assessment is to be made having regard to the information before the Court as to the matters identified in s 30(1) including: • that the money came into the respondent's possession in connection with drug trafficking: s 30(1)(a); • the value of any benefit provided for the respondent: s 30(1)(c); • the market value of the drugs (s 30(1)(d)) disregarding any expenses as outgoings incurred by the respondent in connection with the commission of the offences: s 30(6). 37 This Court recognised in Fagher that the task of a court in carrying out the assessment required by the Act may prove difficult. Fagher was concerned with the Crimes (Confiscation of Profits) Act, which relevantly adopted the same formulation as in the Act, the court being required to make an assessment "having regard to information before the court."
29. After referring further to R v Fagher, the Chief Judge at Common Law said in R v Hall at 554 [41]-[44]: "41 In the present case the information before the court did not otherwise enable the precise amount of the benefit to the respondent from his drug trafficking to be assessed. However, the admissions made by the respondent, which I have previously related, clearly provided information from which an assessment could be made. His Honour should have made that assessment. 42 At first I was minded to order that the matter be remitted to the District Court for the appropriate assessment to be made. However having regard to the additional cost and inconvenience that would be involved I believe it appropriate that this Court exercise the power provided in s 92(4) of the Act and make the appropriate order. 43 From the available information it is apparent, and I would on the balance of probabilities conclude, that the respondent was trafficking to at least the extent of $70 per day for nearly twelve months (being the $50 of cannabis he smoked plus an additional sale of at least $20). Accepting that period to be eleven months, I would assess the benefit at 330 days at $70 per day being $23,100. From that sum $4,110 would have to be deducted making $18,990. An order reflecting this assessment should be made. 44 Before leaving the matter I should mention that the procedure provided by s 31 for the tender of statements by the prosecution from which an assessment of the benefit to an offender can be made would appear to be the preferable manner by which to prosecute this type of matter. By casting an onus upon the offender to respond, the court may be more comfortably able to make an assessment which must, of course, always be adverse to the interests of an offender. The procedure provided by s 31 appears to be that encouraged by Roden J in Fagher. Section 31A will also be of assistance to the prosecution in many cases."
30. The primary Judge approached the present applications in accordance with the three steps referred to in R v Hall at 553 [36] (see [88] above).
31. The primary Judge had regard to the evidence, including the s.31 statements, for the purpose of determining whether drug proceeds orders should be made and, if so, in what amount. Upon the proper construction of s.30(6), I am satisfied that it was open to his Honour to approach the statutory task before him in the manner in which he did.
32. The submission for the Respondents concerning the terms "benefit", "proceeds" and "expenses or outgoings" in the statutory scheme (at [68]-[77] above) should be accepted.
33. I accept the construction of the term "expenses or outgoings" advanced by the Respondents. This term is directed to a range of factors associated with a particular drug supply operation, such as payments made to persons to deliver drugs and payments made for transport hire associated with the delivery of the drugs. It does not extend, however, to the approach advocated by the Director on these appeals.
34. It is pertinent that the long title of the 1989 Confiscation Act refers to confiscation of the "profits of crime". The long title may be referred to as an aid to construction: Pearce and Geddes, "Statutory Interpretation in Australia", LexisNexis Butterworths, 2014, 8th Edn, paragraph 4.48.
35. The construction advanced by the Director would allow, in the case of several co-offenders, a windfall result where multiples of the same sum would be accumulated, and held referable to each particular offender, although the sum in question bore no relationship to what could be regarded as the proceeds of crime or actual benefit derived by that offender from the particular crime or crimes. I do not accept this approach.
36. I do not consider that the conclusion reached in these appeals is inconsistent with the statements in authorities relied upon by the Director concerning the meaning of the term "benefit" in other legislation. Those cases did not involve circumstances, as present here, where the Director sought drug proceeds orders against multiple co-offenders using a process of double counting.
37. The Respondent's submission concerning double punishment must be approached with some care. Mr Dhanji SC noted s. 24B Crimes (Sentencing Procedure) Act 1999, which states: "24B Confiscation of assets and forfeiture of proceeds of crime to be disregarded in sentencing (1) In sentencing an offender, the court must not take into account, as a mitigating factor in sentencing, the consequences for the offender of any order of a court imposed because of the offence under confiscation or forfeiture legislation. (2) In this section: confiscation or forfeiture legislation means the following: (a) the Confiscation of Proceeds of Crime Act 1989, (b) the Criminal Assets Recovery Act 1990, (c) the Proceeds of Crime Act 2002 of the Commonwealth, (d) any other law prescribed by the regulations for the purposes of this definition."
38. Section 24B was introduced following a report of the NSW Sentencing Council. In the course of the second reading speech for the Crimes (Sentencing Procedure) Amendment Act 2010, the Parliamentary Secretary, the Hon. Michael Veitch, said with respect to s. 24B (Hansard, Legislative Council, 23 November 2010): "The [NSW Sentencing] Council was of the view that these orders are imposed to deny offenders the fruits of their crimes and this action should not be considered to be extra curial punishment that might lead to a sentence discount."
39. It is usually the case, as with the Respondents, that the Court imposes sentences, with the question of assessment of drug proceeds orders under the 1989 Confiscation Act to be considered at a later time.
40. The construction advanced by the Director in this case would see the Respondents being deprived, by way of a drug proceeds order, of far more than "the fruits of their crimes". It is at this point that the Respondent's submission based upon the avoidance of double punishment may have some traction.
41. The construction adopted by the primary Judge was open to him, and served to achieve the purpose of the 1989 Confiscation Act. His Honour undertook the process required by ss.29 and 30 of the 1989 Confiscation Act as explained in R v Hall. With respect to each Respondent, his Honour: 1. determined that the particular Respondent had derived a benefit in connection with drug trafficking; 2. assessed the value of the benefit derived by the particular Respondent; and 3. ordered the particular Respondent to pay to the State a pecuniary penalty equal to the amount as assessed.
42. The findings made by the primary Judge were, in my view, open on the evidentiary material before the Court.
43. The Director has not established error of law or fact on the part of the primary Judge in his approach to determination of the applications for drug proceeds orders against the Respondents.
44. In these circumstances, no occasion arises for this Court to consider orders in substitution for those made in the District Court.

Conclusion and Proposed Orders

1. The Director has failed to establish error on the part of the primary Judge in the determination of the application for a drug proceeds order against each Respondent.
2. In these circumstances, I propose the following orders: 1. the Director's appeal with respect to the Respondent Colakoglu is dismissed; 2. the Director's appeal with respect to the Respondent Dodd is dismissed; 3. the Director's appeal with respect to the Respondent EC is dismissed; 4. the Director's appeal with respect to the Respondent Whitby is dismissed.
3. R S HULME AJ: I agree with Johnson J.

Amendments 03 December 2015 - [82] - Amended page reference re Cornwell. [83] - Amended case name re Cornwell. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 03 December 2015